Ahmanson Says Deal with Great Western Would Make Wamu Forfeit Unitary

H.F. Ahmanson & Co. is complaining to federal regulators about the way Washington Mutual Inc. wants to structure its acquisition of Great Western Financial Corp.

Washington Mutual plans to merge Los Angeles-based Great Western into a thrift it acquired last year, American Savings Bank in Irvine, Calif.

But Ahmanson, which launched a hostile bid for Great Western on Feb. 18, is arguing that merging Great Western into American should force Seattle- based Washington Mutual to forfeit its status as a thrift holding company free of product or ownership restrictions.

While it has the freedom afforded unitary thrift holding companies, Washington Mutual actually owns three institutions. That's because federal law allows holding companies to own multiple charters as long as all but one were acquired in deals involving government assistance. American was saved in a deal in 1988, when the thrift insurance fund was broke.

In a May 27 letter to OTS officials, Ahmanson's lawyers acknowledge the exemption applies to American and even concede thrifts covered by the exemption should be allowed to grow. But Sullivan & Cromwell lawyers H. Rodgin Cohen and Mitchell S. Eitel argue OTS must draw the line at an exempted thrift acquiring an institution twice its size.

"The issue is whether the institution resulting from one or more subsequent mergers" is covered by the exemption if the target is "considerably larger" than the buyer, they wrote. "In this case, American Savings is not 'growing,' it is being swallowed by Great Western."

Citing a 1995 OTS ruling, Washington Mutual told the agency that there are no growth restrictions on an institution acquired under the exemption.

"As it has done on numerous other occasions, Ahmanson once again has attempted to manufacture an issue where none exists," wrote William L. Lynch, Washington Mutual's corporate secretary.

OTS officials refused to comment on the question. The agency is currently reviewing applications submitted by both Ahmanson and Washington Mutual to takeover Great Western. u

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